The three major indexes wandered into bear territory last year -- and the market downturn still isn't over. But there is one very bright spot in this picture: A bull market is coming. That's because these times of market growth always follow bear markets.
Superstar investor Cathie Wood is prepared. She's invested in many innovative, high-growth players that may have suffered during the tough times but could take off in a bull market. These stocks are likely to advance because they're leaders in high-growth markets and have track records of revenue growth. The companies also are positioning themselves now for success later. Let's check out two of these stocks that could skyrocket in a bull market.
1. Teladoc Health
Teladoc Health (TDOC 3.31%) is one of Cathie Wood's top 10 holdings in her ARK Genomic Revolution ETF. The company disappointed last year after recording billion-dollar, non-cash goodwill impairment charges linked to an acquisition. As a result, the shares plummeted.
But this has left Teladoc trading at a steal. It's trading at its lowest ever in relation to sales. Why should we -- and Wood -- be optimistic today? For two reasons. First, Teladoc, even during last year's tough moments, continued to grow revenue and telemedicine visits in the double digits. So, there's clearly demand for what it has to offer. Second, Teladoc has adjusted its strategy to favor eventual profitability.
Earlier this year, Teladoc said this strategy shift included better aligning the company's cost structure with its growth rate. Teladoc has cut some jobs and office space. And the company has balanced the quest for revenue growth with the idea of improving margins.
In the most recent quarter, Teladoc showed investors some progress. Consolidated revenue and consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) both topped the company's guidance. It's important to remember that the telemedicine market is growing in the double digits, and Teladoc is well positioned to benefit from this growth. And though the company serves about half of Fortune 500 companies, there's still plenty of room to acquire more members.
All of this means when a bull market arrives, this high-growth player could fully recover and enter a new phase of growth.
2. Tesla
Tesla (TSLA 1.85%) is one of Wood's favorite companies. In fact, the electric vehicle (EV) giant is the biggest holding, with an 11% weight, in ARK Invest's flagship ARK Innovation ETF. What's to like about Tesla? The company is the leader in the global EV market. And its innovation, brand strength, and strategy may keep it there.
I'll talk a bit about strategy here. Tesla recently lowered prices on its least expensive models. That hurt margins in the near term, but it's the right long-term strategy. This should help the company sell more vehicles over time and stay ahead of competition.
So, this combined with tax rebates can open the door to Tesla ownership to more and more people. Including national, state, and local incentives, you can pay as little as about $20,000 for Tesla's Model 3 in certain areas of California, according to InsideEVs' calculations. The Model 3 generally sells for about $40,000.
Tesla also has shown it can handle headwinds such as rising inflation, unfavorable exchange rates, and supply chain troubles. In this context, it still managed to report record net income, operating income, and revenue in the last quarter of 2022. And Tesla has continued to grow vehicle deliveries in the double digits quarter after quarter.
Today, Tesla trades for about $217 a share. Wood predicts Tesla will climb to $2,000 a share in 2027. And her bear scenario still remains optimistic. That calls for Tesla to reach $1,400 by that time. In either case, Wood expects this EV maker to advance significantly from today's level. If she's right, Tesla might indeed soar during the next bull market.
